VENTURE ADVENTURES

Here's what 6 Houston startups have raised millions of dollars this year so far

Houston startups have raised millions so far this year. Getty Images

This year is starting strong when it comes to Houston startups receiving funding. From a $125 million raise from Houston's first unicorn to a local fund gathering up $50 million to deploy in mobility startups, Houston funding news has been pretty exciting.

In case you missed some of these headlines, InnovationMap has rounded up these seven deals based on previous reporting. Scroll through to see which Houston startups are catching the eyes — and cashing the checks — of investors.

HighRadius Corp.

Houston-based HighRadius has reported reaching unicorn status following a $125 million raise. Photo via highradius.com

Let's start with the biggest one, shall we? Houston-based HighRadius, an artificial intelligence-powered fintech software company, closed a $125 million raise, which earned it a a new title: Unicorn.

The series B round, which achieved this status for HighRadius, was led by ICONIQ Capital, with participation from existing investors Susquehanna Growth Equity and Citi Ventures, according to a news release from the company.

The company, which offices in West Houston, was founded in 2006 founded in 2006 and employs more than 1,000 people in North America, Europe, and Asia. In November, HighRadius opened an office in Amsterdam. According to the news release, the company will use the funds to further expand its global footprint.

Read the full story here.

Proeza Ventures

Auto Driving Smart Car image

A new venture capital fund based in Houston and Monterrey, Mexico, has raised $50 million to back mobility startups. Hiroshi Watanabe/Getty Images

New fund Proeza Ventures, which is based in Houston and Monterrey, Mexico, reportedly closed its first fund Proeza Ventures I at $50 million. The fund is backed by Grupo Proeza, a Mexican portfolio management company with two global platforms operating in the mobility and agroindustry sectors, according to the fund's website.

With the fund's money, Proenza Ventures will invest in 12 to 15 early or growth-stage startups with solutions or new technology within industrial, smart components, new vehicles, MaaS, and digital data services.

Read the full story here.

Ambyint

oil and gas

Ambyint, which has offices in Calgary and Houston, has secured funding from Houston venture capital firms. Getty Images

Canada-based Ambyint, which has an office in Houston, has closed its $15 million series B funding. Houston-based Cottonwood Venture Partners led the round, and Houston-based Mercury Fund also contributed — as did Ambyint's management team, according to a news release.

The money will be used to grow both its Houston and Calgary, Alberta, offices and expand its suite of software solutions for wells and artificial lift systems. Ambyint's technology pairs artificial intelligence with advanced physics and subject matter expertise to automate processes on across all well types and artificial lift systems.

Read the full story here.

vChain Inc.

Houston-based vChain, creator of CodeNotary, has raised $7 million in a series A financing round. Pexels

Houston-based vChain, which created the CodeNotary Open Source code trust solution, has raised $7 million in a series A funding round. Paris-based Elaia Partners led the investment round, and other contributors include Zug, Switzerland-based Bluwat and Seattle-based Acequia Capital.

The software tool, which is used to ensure code is securely transmitted throughout the entire development to production process, has several platform integrations and works with languages such as JavaScript, Python, Go, Java, and more.

Read the full story here.

Vivante Health

good intestine health intestine Food for bowel Health

Vivante Health, which uses technology and at-home testing to help users treat chronic digestive health issues, has raised $5.8 million. Getty Images

Vivante Health raised $5.8 million in a series A1 round, according to a news release. The round was led by California-based Lifeforce Capital and Athens, Greece-based Big Pi Ventures. Additionally, NFP Ventures, FCA Venture Partners, and Longmont Capital contributed to the round.

With the fresh funds, Vivante will continue to develop its GI health platform, GIThrive. The digital tool has an at-home microbiome test kit for users, as well as a breath tester that monitors food sensitivities. GIThrive also connects users to on-demand support from nutritionists and experts on the GIThrive app.

Read the full story here.

Hitched Inc.

Houston-based Hitched has dug up new investment money from a local private equity firm. Pexels

Hitched Inc. raised $5.5 million in its series A funding led by Houston-based Cottonwood Venture Partners, a growth equity firm that focuses on digital tech solutions in the energy industry.

The company, which was founded in 2018, coordinates the rentals — from hosting and chartering to managing them — all on one centralized platform. Hitched has a catalogue of equipment from generators and cranes to light towers, pumps to forklifts, and the site lists out the cost per day of each piece of machinery.

Read the full story here.

The second most common reason for startup failure is running out of funds. A Texas expert has tips for avoiding that downfall. Getty Images

Startups are pulling outsized financing rounds and debt acquisitions at an unprecedented rate despite the high 80 percent failure rate of startups overall. Among the three primary reasons why startups tend to fail, running out of cash falls in the number two spot on the list at 29 percent — following no market need.

But startups need to recognize that their time and a strategic fundraising effort are tied together as critical resources to allocate properly to drive their fundraising efforts.

Despite a multitude of ideas and approaches in the pursuit of the very elusive product-market fit and monetization, the majority of startups fail to raise funds or run out of cash after initial fundraising success. For the startup to be successful, it is imperative that funds, finances, and related resources are allocated productively and precisely.

A key part of the startup CEO's job is to understand how much total cash remains on hand and whether it is enough to carry the startup towards a milestone that can lead to successful financing as well as a positive cash flow. Just as important is how to allocate their time and efforts to the fundraising process along the way.

A constant battle

For starters, valuations of a startup do not change linearly over time. Simply because it was twelve months since raising a series A round does not mean that it will be easier to raise more money or be ready for a step-up in valuation. To reach an increase in valuation, a company must achieve certain key milestones that are relevant to showing progress to market and in most investors eye's progress towards monetization.

It is important to understand what potential investors think is worthy of a step up, but generally valuation is pretty flat in between inflection points where key milestones are reached that earn a big increase.

Active vs. passive investment pursuits

Given that it often takes six to nine months and two-thirds of a CEO's time during a major round of fundraising, optimally you should align progress points into major milestones where efforts can be concentrated for fundraising success approaching the inflection points. That does not mean that the CEO can ignore fundraising in between those major milestones, but should think about waves of active and passive fundraising activities.

Active fundraising is obvious, which is the typical efforts to craft a pitch, meet with investors, nurture investor prospects into lead and following investor types. Most of the effort should be put into the early investors that will lead the round as the first checks are always the hardest.

From my experience rounds develop their own momentum when reaching about 40 percent of their target and even more when reaching 60 percent as long as the prospective investor pool is large enough. However, the CEO cannot ignore the company's progress while the raise is actively underway, as they will typically meet with prospective investors multiple times who will want to hear about progress each time.

Passive fundraising is less obvious, which happens in the gaps in between active fundraising where one round closes and before the next round starts. The primary passive activity is general investor networking, where the CEO should be out expanding their network, meeting new prospects and trying to identify the mostly likely early investors or best fit for the company.

I'm not suggesting this is really a passive activity, as it takes a lot of work. But this should be an ongoing between rounds. This passive effort gives the CEO a chance to put most of their emphasis on the progress of the company to the next milestones, but avoids a cold start to the next fundraising round.

Regardless, there are two best practices in this passive mode. First, use networking techniques to identify good prospective investors for your company and two to work on getting referrals to investors well before an actual fundraising round is open. Getting a referral is obviously to your advantage, because it takes you out of cold-calling mode that has a low success rate.

Meeting an investor while you are not fundraising takes the pressure off both the CEO and investor and gives them a chance to get to know each other personally. Again, many will not be your round leaders or champions to other investors, but this lower pressure effort gives investors a chance to listen and reach out to potential experts in their networks to validate the problem and your solution.

With the relationship established and your solution validation received, moving to an active discussion about investment comes more naturally as well as targeting of the best lead investor candidates leading to due diligence, negotiation and closing the funds.

Within a technology development firm like my firm, VIC, we have the benefit of "always-on" VIC Investor Network that we are constantly working to refresh and expand. Because of our large portfolio, seventeen companies at the time of writing this, there is a good chance that almost any life science investor can find something that suits their interest, experience, or passions.

Each member of the firm can allocate their time between active and passive efforts for the companies they are most closely involved with while still providing a wide portfolio of other companies that might be of interest to a prospective investor. Even with a portfolio of companies, the same concepts of active and passive efforts apply.

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James Y. Lancaster is the Texas branch manager for Arkansas-based VIC Technology Venture Development. Lancaster, who lives in College Station, oversees business there, in Dallas, and in Houston.